Fraud takes a heavy toll on the insurance industry. Estimates on fraud losses run from five percent of the cost of claims, up to as much as 22 percent depending upon the geographies and the lines of business involved.
Insurers can improve their overall results by fighting fraud more effectively. Doing so, however, calls for an integrated and effective fraud fighting process. This means setting up and mobilizing various components including data and analytics, process and controls, and internal and external resources such as subject matter experts and investigators.
Accenture has examined ways to transform data and analytics into useful tools in the fight against fraud. Advanced analytics, in particular, can help insurance companies better detect and fight fraud, including small-scale personal fraud and large-scale organized fraud rings. New tools derived from analytics include business rules, anomaly detection, predictive modeling, voice mining and data visualization.
While these tools are useful, data and analytics alone are not sufficient to fight fraud and financial crime. For improved effectiveness, these techniques should be supported by efficient business processes, organization and governance.
Designing an effective and efficient anti-fraud organization starts with core objectives, including:
- Improving the fraud detection rate;
- Establishing an anti-fraud culture throughout the organization by implementing an integrated, consistent approach for all lines of business; and
- Meeting and maintaining compliance with all applicable laws and regulations.
These objectives should reflect the company’s specific products and operations, its clients, channels and distribution, and its risk culture and appetite. Ultimately, its organizational structure for fighting fraud should identify the anti-fraud missions and responsibilities for each entity or line of business, define roles and specify interactions between different teams.
An efficient anti-fraud organization can be a competitive advantage for an insurance company. In subsequent posts, we will review in more detail how such an organization should be established and some of the key elements to support this effort, including structure, governance, technology and metrics.
To find out more about Accenture Finance & Risk Services, please click here.
Other parts of this series: